PARTICIPANTS
Jim Connaughton, Chairman of the White House Council on Environmental Quality
J.D. Crouch, Deputy National Security Advisor

11:36 A.M. EDT

MS. PERINO: Good morning. We are on our way to St. Louis, Missouri,
and then we're going to go to Chicago. So we are leaving sunshine and
headed into the snow. So that's your weather forecast. Let me tell you
that the President this morning had his normal briefings. He had a call
to Prime Minister Howard of Australia. That call was read out this
morning. Did everyone get that, or would you like me to repeat it here?

He will -- the President will give the keynote address at the renewable
energy conference. This is a joint conference sponsored by Department
of Energy and the United States Department of Agriculture, so
Secretaries Bodman and Johanns. The title of the conference is the 2006
Advancing Renewable Energy conference. We expect approximately 1,400
attendees.

And then at 5:20 p.m., after we get to Chicago, the President will make
remarks at Roskam for Congress, David McSweeney for Congress 2006, and
an Illinois Congressional Victory Committee. And then we -- the
President will arrive back at the White House at 9:40 p.m.

I want to let you know that I brought -- I brought Jim Connaughton back.
He's the President's -- Assistant to the President and the Chairman of
the White House Council on Environmental Quality.

There was also a meeting today that I'm trying to get a little bit more
information on. I'm going to come back at the end of the flight with a
little bit more. State Councilor Tang of China visited the White House
today. President Hu informed the President on Monday in their phone
call that President Tang was going to be in town -- I'm sorry, that
State Councilor Tang was going to be in town. And the Councilor met
with Secretary Rice and Hadley before going to the Oval Office to meet
with the President. J.D. Crouch is on the flight. I'm going to be
getting some more information from him, and then I'll come back and try
to give you some more on that.

Right now, let me give Jim Connaughton a chance to give you a quick
rundown on the events for this morning, and then I'll take other
questions before I come back later.

CHAIRMAN CONNAUGHTON: Good morning, everybody. I'm Jim Connaughton,
the Chairman of the White House Council on Environmental Quality, and I
advise the President on energy and environment/natural resource issues.

Today's conference is being hosted by the Department of Agriculture,
Secretary Johanns, and the Department of Energy, Sam Bodman, but it will
also include speeches by EPA Administrator Steve Johnson, and a
significant number of administration officials, that are focused on the
implementation of the President's Advanced Energy Initiative, which
includes a very strong emphasis on renewable energy technologies, both
in terms of how we power transportation systems, as well as how we power
homes, businesses and offices.

Today's speech will be very technology focused. There are many other
policy arenas in this subject area, but this will be very focused on the
technologies. Now the agency leaders are putting an emphasis on the
promise for even more vibrant rural economies through the instillation
of the facilities and the development of the technologies that allow us
to reduce our reliance on foreign sources of energy, especially oil, and
allow us to create more diversified opportunities for different fuel
sources, for different kinds of vehicles, as well as for vehicles and
fuels that don't involve gasoline or petroleum-type products at all.

So we will be talking about -- the President will be talking today about
where we are going with hybrids, where we are going with a new
generation of clean diesels -- which has been enabled by the fact that
starting this weekend, all diesel fuel in America will have cut its
sulphur dioxide by more than 95 percent. That will enable a new breed
of diesel engines that will be more than 90 percent reduced in nitrogen
oxide, and create a platform for diesels in passenger cars and in light
trucks like pickup trucks that we haven't seen before, and will promote
significant fuel efficiency.

Now with hybrids and clean diesels, we then can look to plug-in hybrids
-- just to give you an example on plug-in hybrids, I drove one last
week, one of the few prototypes that's out there in the United States
today. It got 156 miles per gallon -- and the opportunity to take our
advances in hybrids and move to move to plug-ins is a huge opportunity.
All of these technologies will enable a switch to renewable fuels,
initially ethanol, increasingly biodiesel, and then ultimately,
consistent with the President's State of the Union initiative,
cellulosic ethanol, that can be made from a wide variety of plant
materials and plant waste materials.

As of today, since the President took office, we've increased the
nation's consumption of ethanol three times, and we've seen biodiesel go
from almost no production to nearly a billion gallons of production.
And then, of course, the President has spoken often over the last five
years about hydrogen, and we are well, well along in the $1.2 billion
initiative to produce hydrogen fuel.

On powering our homes, businesses and offices, the President, over the
course of the last several years, has placed a strong emphasis on the
need for efficiency and conservation. Today's remarks will focus on the
technologies that makes greater efficiency conservation and more
effective use of energy possible.

One area of high importance, of course, is solar and wind. In America,
since the President took office, we have tripled our production of wind
energy. And in fact, this year, the nation -- the United States has
installed more wind than any other country, more wind power.

We also have a solar initiative as part of the Advanced Energy
Initiative, which is trying to dramatically cut the cost of solar.

Now, with in some of the bigger base-load technologies, the President
will be discussing nuclear and the new global nuclear energy partnership
which seeks to create an international effort to reduce the -- to
recycle more nuclear material, spent nuclear fuel, so we reduce
dramatically the amount of waste that needs to handled and to do so in
partnership with countries that responsibly produce nuclear power and
responsibly manage the waste, and responsibly avoid proliferation
issues.

In addition, the President will talk about clean coal. The first step
to clean coal is more efficient coal; the second step is to cut the
pollution from coal, which we'll be doing by nearly 70 percent, which
will result in a nearly $50 billion investment in new clean coal
technologies at our power plants. And then the significant new funding
in the President's Advanced Energy Initiative to take us to
zero-emission coal.

This is all part of a bigger picture of international engagement. The
last two G8s have focused very specifically on energy security and the
related issues of cutting air pollution and greenhouse gases associated
with climate change. And we will expect that conversation to carry
forward at this upcoming G8 hosted by Germany. As part of that, there's
a strong international engagement on renewable fuels.

The U.K., for example, has gone from nearly no renewable fuels and
substantially increased their current use of renewable fuels and have a
strong new mandate for renewable fuels. And then we have international
efforts underway, for example, on how to capture methane from
agricultural operations and from landfills to produce clean-burning
energy at a significant profit.

This also takes form in a significant set of energy initiatives in the
Asia Pacific Partnership on Clean Development and Climate, which
includes China, India, Australia, South Korea and Japan.

MS. PERINO: Any questions for Jim?

Q Is there anything new, any new announcements or new programs in the
speech today that the President hasn't talked about before?

CHAIRMAN CONNAUGHTON: Today the President will be highlighting the
remarkable progress we've made since we've been implementing the Energy
Policy Act of 2005 that he signed last year, as well as the recent
milestones related to his Advanced Energy Initiative. So you'll be
getting a very significant progress report on how far we've come, and
then where we're heading.

MS. PERINO: Great. Any other questions for me?

Q Are you coming back to gaggle again, or --

MS. PERINO: I'm going to try to get some more information about the
meeting that I mentioned, with State Councilor Tang, so I can get a
readout about how that meeting went. Obviously, the President wanted to
meet with this gentleman because of the ongoing discussions with our
partners in the six-party talks, and since he was in town -- I just need
to get an update from them and then I'll try to come back on that.

Q Did he call Howard or did Howard call him this morning -- Prime
Minister Howard?

MS. PERINO: The phone call was scheduled for 7:30 a.m. I don't know
who placed the call. If I can get that for you, I'll come back. Okay,
we'll be back.

* * * * *

DR. CROUCH: What I thought I would do is give you a little background
today on the meeting that occurred. We had Chinese State Councilor Tang
here. He had a meeting with the Secretary of State and the National
Secretary Advisor, and then followed by a meeting with the President in
the Oval Office. I think this was a good example of the high level of
consultations that exist between the U.S. and China on the North Korean
issue.

President Bush had spoken with President Hu of China, as you know,
earlier, and President Hu had said that he would be dispatching State
Councilor Tang to come and brief on Chinese thinking on the North Korean
situation.

So it was a good set of meetings, we exchanged views. I think we've got
a very positive way forward. Everybody agrees that we have to deal with
the -- this North Korean nuclear test, we have to have a resolution in
New York and that we're going to have to take some strong measures to
convince the North Koreans that the true path for their future really is
to get back to discussions, to implement the September 2004 joint
statement and to denuclearize the Korean Peninsula. So there was a
broad set of agreement. I think that agreement is shared not only with
our friends in China, but also, of course, with our allies in Japan,
with similar statements that have been made both by Prime Minister Abe
and, of course, by President Roh of the Republic of Korea.

So there's a strong basis now, I think, for moving forward in New York.
And, obviously, the President has, through the Secretary of State, has
instructed Ambassador Bolton to move forward with a resolution in New
York.

Q Did the Chinese State Councilor -- did Mr. Tang specifically say
that China would go along with measures as strong as the United States
would like to see in that U.N. resolution?

DR. CROUCH: We're still discussing the details of what would be in a
resolution. I think what's important -- and there was not a detailed
discussion of the contents of that. That is obviously something that's
going to be left for negotiation up in New York. But I do think that
the Chinese came with a message that they agree that there had to be
some strong measures that were taken to convince the North Koreans to
get back on a positive negotiating track.

Q Can you tell us some specific things that were talked about? And
can you tell us whether the President asked the State Councilor for
China to do anything specifically?

DR. CROUCH: Obviously, there was a broad-ranging discussion not only
about action up in New York, but about how we would work together to try
to bring about a diplomatic resolution of this issue. And in
particular, I think there was a strong emphasis both from the Chinese
side and the U.S. side that we needed to find a way to get the North
Koreans to implement their commitments under the September 2004
agreement to de-nuclearize the Korean Peninsula.

So there was -- there was discussion, obviously, not only about the
resolution, which is one element of that, but what -- there might be
diplomatic approaches that are made to do that and to make sure that we
stayed in close coordination of our policies because it was really -- I
think there is a general view that working among the five parties
together we would be in a position to put maximum influence on North
Korea to move in that direction.

So basically that was the main message. It was at a pretty general
level, but they did -- I know that there is expectation that the details
for the resolution, I think, will be worked out. The Secretary of State
will obviously be talking to Ambassador Bolton and giving him some
instructions.

Q Our reports out of China this morning said that the Chinese seem to
be backing away from a travel ban and financial sanctions. Did they
make that clear in that meeting? Did that come up?

DR. CROUCH: There wasn't a detailed discussion of specific elements of
the resolution. As I said, there was a broad understanding that there
needed to be strong response. And I think that the details of those are
going to have to be negotiated -- obviously, negotiated out not only
between the United States and China but among all the members of the
Security Council.

Q But the problem is that your definition of strong measures and the
Chinese definition of strong measures don't necessarily coincide. So
when you say that they agreed that strong measures were needed, what
exactly does that mean?

DR. CROUCH: I'm saying that at this point those things have to be
negotiated out. I think it's a positive sign that we all agree that we
need a resolution and that we need to have -- to go forward with strong
measures.

Now, obviously, the details of that, there's possibility for
differences. But those things are the kinds of things that get worked
out in the context of those negotiations. But I think it's a very major
step and a positive step that we now have all the major players in this
arguing, in fact, for a strong resolution.

Q The meeting -- sorry, how long was the meeting?

DR. CROUCH: I think the meeting -- I want to say the meeting with the
President was about 15 minutes, and I think the meeting with the
Secretary of State and the National Security Advisor was probably about
half an hour. That's right our negotiator Chris Hill was there, as
well.

Q This gentleman was named as a special envoy, is that correct?

DR. CROUCH: I'm sorry. I can't hear you.

Q He was named as a special envoy, right? Tang?

DR. CROUCH: Tang -- his title is State Councilor, which my
understanding in their system is a very senior -- it's a super Cabinet
position.

Q Sounds like an envoy.

DR. CROUCH: It's Councilor with a C. And it's a very high ranking
position.

Q You have a good historical sense of the Clinton administration and
the bilateral agreement in 1994. Can you just talk for a minute about
why that didn't work, and why this is different right now, what
President Clinton is doing -- I mean, President Bush is doing, and how
we can move this forward with the six-party talks?

DR. CROUCH: Well, if you go back to the 1990s, it's important to
remember that throughout the '90s we judged that there was a nuclear
weapons program that they had developed, I believe back when he was CIA
Director in the last administration, CIA Director Tenet briefed that we
believed they had material for one to two nuclear weapons, we believed
they had an ongoing weapons program. And so that was really the genesis
of the concern about this.

If you look at sort of the history of that, basically the Clinton
administration entered into a set of largely bilateral discussions which
ended with the -- something called the "Agreed Framework." The Agreed
Framework did not eliminate those weapons, it did not eliminate the --
for example, the spent fuel that had been taken out of the Yongbyon
reactor, but it essentially was a freeze in place of that, and a
commitment by the North Koreans that if the international community --
when the international community provided heavy fuel oil and the
construction of two very large light water reactors, that they would
allow, then, the IAEA to come back in and they would allow -- they would
come back into compliance with the NPT.

So it's important to understand that throughout this entire period,
effectively, the North Koreans are outside compliance of the NPT, and
outside compliance of the IAEA safeguards agreement, all right? So this
agreement was put in place. I don't know the exact numbers, but I think
the international community, including the United States, spent over a
billion dollars, maybe even over $2 billion implementing this agreement,
including provisions of heavy fuel oil and the beginning of construction
of light water reactors, two 1,000 megawatt light water reactors in
North Korea.

There were already some indications that -- by the end of the '90s that
they weren't living up to this agreement. There was diversions of fuel
oil and there were some other aspects of this. And you'll remember that
when the Bush administration first came in, the Agreed Framework was in
place, it was moving forward. And I believe it was sometime in 2002
that some very powerful evidence emerged -- or crystallized, is a better
way -- that they had been pursuing a uranium enrichment program,
separate from the plutonium path to the bomb that the Agreed Framework
had focused on.

Now, that uranium enrichment program was not only a violation of the
Agreed Framework, it was also a violation of the North-South
Denuclearization Agreement, the IAEA Safeguards Agreement, and the
Nonproliferation Treaty. And it was at that time that the
administration moved away from implementation of the Agreed Framework
because we had clear evidence that the North Koreans were not honoring
that agreement; in fact, were not even honoring the central commitment
of that agreement, which was to give up their nuclear weapons program.

The other thing that's important to remember is that during the 1990s
there was a real effort to develop an approach that was bilaterally
focused. And when we looked at this issue, we thought that the most --
first of all, it was an international issue; it was not something that
was really an issue between the United States and North Korea, it had a
broad impact in the region. It affected our allies' security -- Japan,
the Republic of Korea, and obviously, would have an impact on China.
And so we thought it was very important to multilateralize these
discussions on a substantive level.

On a leverage level, if you look at who were the countries that had the
most leverage on North Korea, obviously it was a combination of the
international community, the force of the U.N., but also in particular,
the close relationships with the Republic of Korea and China. So it was
important to make sure that they were brought into the process. And I
think the success so far has been our ability to bring all these parties
together to get them focused on a common set of objectives and to now,
unfortunately, after this alleged -- potential test, to get them to put
pressure on the North Koreans to fulfill their commitments.

I think it's a different approach. And if you think about the '90s, a
great deal of effort was spent -- the Secretary of State, during the
'90s, went to Pyongyang and had a series of meetings. I think she met
with Kim Jong-il. There was a lot of bilateral effort, there was a lot
of effort to try to provide energy capabilities for the North Koreans.
And that effort really didn't work, because by the late '90s and
certainly by the discovery of this uranium enrichment program, it was
pretty clear that the North Koreans were continuing to develop nuclear
weapons and a nuclear capability.